Jul 18, 2012

21 Ways To Prepare For A Short Sale Purchase
                               (PART 2)

This is the second article in my series about preparing to buy a short sale property.  Here's are 7 more helpful tips to help you prepare with, if you're considering a short sale purchase:

8) Impossible To Predict Success:  Short sales are continuously fraught with new rules, regulations, and policies by short sale lenders, loan servicers, and government agencies, alike.  It is therefore not possible to predict the successful outcome of any particular short sale transaction.


9) Incentives Go To The Seller:  Some short sale lenders provide the seller with a “financial incentive” for participating in the short sale transaction, and avoiding foreclosure.  These incentives are not intended to be shared with the buyer.


10) All Documents Are Time Sensitive:  If the Short Sale Lender requests any supporting documents from the buyer (proof of funds, as-is addendums, etc), these are always time sensitive and should be submitted without delay.  Procrastination may cause the rejection of your short sale offer.


11) Paying Homeowner Association Fees:  Its important to understand that many sellers do not have adequate financial resources to close their short-sale transaction.  They oftentimes rely on the short sale lender to cover certain of these HOA fees as transaction costs.  In turn, most short sale lenders are unwilling to pay the homeowners association fees (transfer, status, or working capital).  Buyers must be prepared to pay such costs to make the transaction fly.

 
12) Surprise Costs & Fees:  The short sale lender may also require the buyer to pay certain other 'surprise' costs and fees, in order for the lender to agree to a short sale transaction.  Some lenders will try to extract title fees, past-due utility bills, or even short sale negotiation fees, and these costs can be upwards of a few thousand dollars.   Fromt time to time, I run into listings which require the buyer to cover the lenders’ “negotiation” fee, which can vary from $500, to upwards of $3,000.


13) No Closing Costs:  Many short sale lenders will not pay buyer closing costs.   The FHA short sale program does permit 1% of the purchase price towards closing costs, but that's the max.   Because asking for closing costs will weaken your offer from a competitive standpoint, buyers should be prepared to avoid asking for closing costs when attempting to make the strongest offer possible.


14) Anticipate Price Changes:  The short sale lender may disagree with the value of the property, even after the seller has accepted your offer.  Under these circumstances, buyer may wind up agreeing to pay more.  The lenders idea of value may not become known until:  1) They first approve the seller for a short sale;  2) They then conduct multiple appraisals on the property;  3) And, they review your contract offer.   Some short sale lenders may change their mind on value at any time, without forewarning, so be prepared.

Part I - Denver Buyers Prepare For Short Sale

Part 3 - Denver Buyers Prepare For Short Sale

Michael Dagner is an expert in Denver-Area home sales,
and a member of Short Sale Superstars. Call today, (303) 514-4000,
for help with your short sale, or purchase.

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